Ashby Footehttp://northsidesun.com/taxonomy/term/206/0
enMr. Trump goes to Washingtonhttp://northsidesun.com/opinion-columns/mr-trump-goes-washington
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202016_3.jpg?itok=Z6ChAQtz" width="576" height="360" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>In due time there will be hundreds of volumes and millions of words written about the 2016 presidential campaign and election. They need to be written, they need to be read and they need to be studied. Pick your weather metaphor – this was a thousand year flood, a Category 6 hurricane or a magnitude 10 on the Richter scale earthquake that may yet trigger the San Andreas fault. Its shocking outcome surely ranks as one of the biggest upsets in the history of America and for that matter in the history of democracy. The two oldest and most powerful political parties on the planet got busted. Busted by voters revolting against a ruling class that wasn’t listening. Donald Trump got the headlines, but he was just the hammer that voters picked up and threw through the dining room window. Along with the window, plenty of fine red and blue china was shattered as well. Was the campaign and election a fluke or will it turn out to be a hinge point in history? Time will tell.</p>
<p>The 2016 campaign defies traditional analysis. Viewing it through the usual Democrat versus Republican template misses some of the critical lessons. This campaign was not right versus left but rather establishment versus non-establishment with the establishment getting thrashed.</p>
<p>One week post the election two themes stand out: the ‘Populist Uprising’ and ‘Nationalism versus Globalism.’</p>
<p>Populism according to thefreedictionary.com: “A political philosophy supporting the rights and power of the people in their struggle against the privileged elite.” As it turned out, this election cycle provided the ultimate in populist campaigns with two compelling outsiders whose populist messages drew massive crowds, generated broad grassroots funding and created huge enthusiasm gaps over their respective establishment challengers. It was obvious early on that this was a change election and voters were hungry for a populist type message. In fact the anti-establishment messages of Sanders and Trump shared much in common. As Peggy Noonan put it, “This election is about the protected classes versus the unprotected.”</p>
<p> </p>
<p>Populist influence on American elections is not novel or new. America has a long and colorful history of populist anti-elitist rabble-rousers stirring up the political arena with hyperbole and over the top salesmanship in their quests to enthuse the masses and generate political power for their movements. Some famous and flamboyant examples are William Jennings Bryan, Huey Long and H. Ross Perot. Their ability to influence the national agenda is a sign of a healthy democracy, but they aren’t supposed to get a major party presidential nomination much less win the presidency.</p>
<p>The second theme that is profound for what it portends both here and abroad is that of Nationalism versus Globalism. The sentiments of many Trump supporters were not unlike the British voters who affirmed a “Brexit” vote in late June to leave the European Union. It was a vote against what has become the too powerful, too centralized, too expensive and too unresponsive administrative state in Brussels. The same complaints can be made of Washington, D.C. And there are more country votes to come in the months ahead over the same issues. The EU might well be headed for dissolution. It turns out countries and their unique cultures matter a great deal to plenty of citizens. Reporter Edward Isacc Dovere of Politico offered this post-election observation, “They’ve already lost the chance to lock in Obama’s vision of America, one that is educated and pragmatist, multicultural, cosmopolitan and globalist.”</p>
<p>The Trump train has now arrived at Union Station. It is not known if they are adding cars to accommodate some of the Republican establishment that have seen the light since November 8. Regardless, the populist fervor here and abroad is real and engaged. The voters rule and they will be watching closely. In the words of Thomas Jefferson, “I hold it that a little rebellion now and then is a good thing and as necessary in the political world as storms in the physical.” </p>
<p>Ashby M. Foote III , president Vector Money Management and Jackson City Councilman, Ward 1</p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/opinion"><span>Opinion</span></a></div><div class="field-item odd"><a href="/columns"><span>Columns</span></a></div></div></div><div class="field field-name-event-calendar-date field-type-datetime field-label-above"><div class="field-label">Date:&nbsp;</div><div class="field-items"><div class="field-item even"><span class="date-display-single">Friday, November 18, 2016 - 11:00</span></div></div></div>Fri, 18 Nov 2016 16:54:43 +0000wmccain3226 at http://northsidesun.comBrown should focus on Kemper budget messhttp://northsidesun.com/opinion-columns/brown-should-focus-kemper-budget-mess
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202016_1.jpg?itok=gmuMKtWo" width="576" height="360" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>In a recent Northside Sun commentary, my friend Cecil Brown called out the state Legislature charging that, “The Mississippi state budget is a mess.” A CPA, Cecil spent 15 years as a state representative where he did more than his share of stubby pencil work on the state budget. Before that he served as the state fiscal officer and executive director of the Department of Finance and Administration under Gov. Ray Mabus. In short, Cecil Brown understands budgets and the critical role they can play in determining an organization’s success or failure.</p>
<p>But as messy as the state budget is, it stands like a paragon of fiscal rectitude next to the multi-billion dollar black hole that is Mississippi Power’s (MP) controversial Kemper Integrated Gasification Combined Cycle (IGCC) Power Plant. The plant is years behind schedule and $4.5 billion over its 2010 cost estimate of $2.4 billion. It is fair to say that it is the biggest busted budget in the long history of Mississippi. Even now, two years after the IGCC’s planned 2014 start-up there is no guarantee it will even work. Coincidentally and ironically, the Kemper project now falls under Cecil Brown’s new area of oversight as a freshly elected member of the Public Service Commission (PSC).</p>
<p>The PSC needs to consider these facts:</p>
<p>While the Legislature contemplates a $70 million dip into the state’s $350 million rainy day fund, MP has been gulping down hundreds of millions from the rainy day funds of their 186,000 ratepayers thanks to PSC sanctioned rate increases in advance to pay for the still unfinished and unproven Kemper project.</p>
<p>A 585 megawatt (MW) combined cycle natural gas (CCNG) plant would have cost MP $600 million, but MP used wildly inflated natural gas price projections to make the case that CCNG was uncompetitive. Years later the state Supreme Court ruled 9-0 against MP in a Freedom of Information Act (FOIA) case to make public those natural gas price projections. Those projections, made in 2009, forecast that by 2016 natural gas prices would average $12 per million BTU. Seven months through 2016 natural gas has averaged $2.30 – a 500 percent miss by the energy experts at MP. Alas, that is not all they missed – their estimates on the cost of Kemper were just as erroneous on the flipside. One is left to wonder if today’s gargantuan cost overruns might not be a result of lowball, ‘teaser’ estimates on the front end to make Kemper IGCC look more competitive when it never really was.</p>
<p>Even the 2010 Kemper cost estimate of ‘just’ $2.4 billion was uneconomical for a plant that will produce just 16 percent, or 585 MW, of MP’s needed capacity. It is crazy for a company like MP with equity of $900 million to invest $2.4 billion on one experimental plant. Concentrating over 60 percent of the company’s equity in one experimental project that would produce less than 20 percent of required capacity exposed MP’s entire system to the risk of financial failure. That MP and its parent Southern Company (SC) would continue the project when the price climbed to $2.8 billion, then $3.8 billion and now $7 billion was and is folly. Was it their strong confidence that the PSC would bail them out with ever higher rates on ratepayers that kept them throwing so much good money after so much bad?</p>
<p>And it’s no longer just the Bigger Pie Forum and the Northside Sun that are ringing the bell on this billion dollar boondoggle. The SEC recently launched an investigation into the Kemper project and the nation’s newspaper of record, the New York Times, recently published in print and online the major expose about Kemper, “Piles of Dirty Secrets Behind a Model ‘Clean Coal’ Project.” In addition lawsuits from disgruntled vendors and customers are piling up on the company’s front door. It is no secret that the national reporters that cover the utility industry consider Kemper the worst power project in the country. The sad fact is the oversight provided by the PSC has been behind the eight ball regarding Kemper for 10 years and the calamity has now attracted a national audience. Kemper has now moved from a discussion of sloppy budgets and business practices into the realm of potential criminal behavior.</p>
<p>The good news is that Cecil and his two very capable fellow PSC commissioners have been handed a great opportunity to get some clear insight into what was going on inside the Kemper project as the costs exploded from $2 billion to over $7 billion. This sunshine is available thanks to a whistleblower who has come forth regarding mistakes, mischief and outrageous conduct by the management of MP and its parent, SC. The whistleblower, an engineer, was a project manager on the frontlines of the project from 2011 to 2014 and he is at the heart of the SEC investigation and the New York Times expose. In the interest of due diligence and good government, the PSC needs to hear what the whistleblower has to say and it needs to be done where the public can tune in as well.</p>
<p>What is at stake is not just the budgets of the Kemper project and Mississippi Power but also the budgets for decades to come of MP’s 186,000 ratepayers. Will the PSC get it right? To borrow Cecil Brown’s words from his state budget commentary, “If they are wrong, it will be the unelected, hard-working, honest people of Mississippi who will suffer the consequences long after the current leaders have left office.”</p>
<p>Ashby Foote is president of Vector Money Management and the Bigger Pie Forum. He is a Jackson city councilman.</p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/opinion"><span>Opinion</span></a></div><div class="field-item odd"><a href="/columns"><span>Columns</span></a></div></div></div><div class="field field-name-event-calendar-date field-type-datetime field-label-above"><div class="field-label">Date:&nbsp;</div><div class="field-items"><div class="field-item even"><span class="date-display-single">Wednesday, August 3, 2016 - 12:45</span></div></div></div>Wed, 03 Aug 2016 17:54:47 +0000wmccain2736 at http://northsidesun.comCraft brewers can help create entrepreneurshiphttp://northsidesun.com/news-opinion-columns/craft-brewers-can-help-create-entrepreneurship
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202016_2.jpg?itok=Xj86ngcJ" width="576" height="360" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>If you are not a beer drinker you may have missed a profound shift in the adult beverage marketplace. Business for the Big Beer brands has gone flat. Overall beer sales are doing fine but all the excitement and growth is in craft beer – especially the small batch brewers which are sprouting up at a rapid pace. Since 1989 the number of breweries in the United States has exploded from 89 to 4,400, with industry watchers expecting the total to hit 10,000 over the next five years. Even craft pioneer, Sam Adams, is struggling against the rapid proliferation of small batch local brands. This is good news for beer aficionados and also for economic developers (more on that later).</p>
<p>Beer is not the first billion dollar beverage to see its economics turned upside down. As a way of explanation, the craft brewers are now doing to Budweiser and Miller what Starbucks did to Folgers and Maxwell House. The keys to success for consumer products in the industrial era were branding, massive scale and distribution. Bigger was better and the advent of radio and TV helped create national brands that consolidated and then dominated their respective industries for decades. But times have changed and those industrial rules don’t seem to apply in the 21st century.</p>
<p>There is much to learn from Starbucks’ journey from coffee shop to coffee juggernaut. The Starbucks saga began with a mash-up of business models – part good product, part onsite production, part customer experience and part community connection. This proved to be a winning formula as millions of Gen Xers and millennials, it turns out are quite willing to wait longer and pay more to have a highly trained barista prepare and serve an espresso macchiato or double cinnamon latte. Call it the “experience” factor. Starbucks took that “experience” factor and turned it into an $80 billion business with 191,000 employees – that’s 25,000 more workers than Ford Motor.</p>
<p>At the heart of today’s economy are the 20, 30 and 40-somethings and what matters to them. Perhaps it is pushback against the Dilbert world of cubicles and computer screens but regardless the post-industrial generations seem to crave all things authentic and organic. Show them an empty warehouse and they are most likely to imagine a venue for live music, food and drink. It is not by accident that hundreds of startup breweries and distilleries across the country are repurposing dormant industrial buildings for their new enterprises. It is a super cheap form of capital and it has been instrumental in reinventing underutilized urban spaces across the country.</p>
<p>These craft BEER entrepreneurs continue to embrace and expand on the Starbucks formula. To good product, onsite production, customer experience and community involvement you can add food and tourism as breweries have become a destination for travelers and serious fans of craft beer.</p>
<p>Sadly, Mississippi ranks 50th among the 50 states in craft brewers per capita. The culprit according to Mark Henderson, founder of Lazy Magnolia and president of the Mississippi Brewers Guild, “Mississippi has the most restrictive laws concerning breweries of any state in the United States. It is the only state that does not allow a brewery to sell its own product, and it wasn’t until the law changed in 2012 that we could give it away. When the law changed so that we could give away a small amount of product, the number of breweries in state went from one to 10, but has since stalled out. Other states continue to grow their manufacturing, but Mississippi breweries are not competitive and our numbers show it.”</p>
<p>But Henderson continues to see the glass as half full, “Breweries are part of the greater movement toward local food, local business and taking pride in our community. We are proud to be part of that.”</p>
<p>So what does the craft brewery phenomenon mean for Mississippi towns and cities? Andrew “FoFo” Gilich, mayor of Biloxi, put it this way when welcoming Biloxi Brewing co-founder, Mark Cowley, “There are 11 signs of a great city and craft breweries are one.” The source for Mayor Gilich’s claim is a March 2016 article from The Atlantic magazine. The article goes on to say, “A town that has craft breweries also has a certain kind of entrepreneur, and a critical mass of mainly young (except for me) customers. You may think I’m joking, but try to find an exception.”</p>
<p>Mark Henderson, Mayor Gilich and The Atlantic magazine are spot on. If Mississippi towns and cities are going to keep pace in the 21st century they need regulatory frameworks that are friendly to the post-industrial entrepreneurs and the businesses they create.</p>
<p>Note to readers: The second annual Mississippi Craft Beer Festival will be held on Friday, June 24 in Jackson on the grounds of Duling Hall - a repurposed elementary school (circa 1928), in the Fondren Entertainment District. </p>
<p>Ashby Foote is president of Vector Money Management and Ward 1 Jackson city councilman.</p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/news"><span>News</span></a></div><div class="field-item odd"><a href="/opinion"><span>Opinion</span></a></div><div class="field-item even"><a href="/columns"><span>Columns</span></a></div></div></div><div class="field field-name-event-calendar-date field-type-datetime field-label-above"><div class="field-label">Date:&nbsp;</div><div class="field-items"><div class="field-item even"><span class="date-display-single">Thursday, June 23, 2016 - 17:00</span></div></div></div>Thu, 23 Jun 2016 21:56:30 +0000wmccain2368 at http://northsidesun.comPop goes the establishment bubblehttp://northsidesun.com/opinion-columns/pop-goes-establishment-bubble
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202016.jpg?itok=e1rZitFR" width="576" height="288" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>For political junkies campaign 2016 is as good as it gets. Mayhem, drama and surprise from all fronts. Throw out the good manners. Throw out the rulebook. Throw out the litmus tests. Throw out the dogmas - the consultants - the focus groups. Throw out the pundits - they know nothing. Throw them all out - the baby - the bathwater - even the sink.</p>
<p>What we are witnessing is the bursting of a bubble – call it the ‘political establishment bubble.’ Remember the dot.com and housing bubbles? The common denominator was ‘too much money’ overwhelming not enough common sense. The same phenomenon is at work in politics today.</p>
<p>The ‘too much money’ in politics can be traced back to January 2010 when the Supreme Court decided the case: Citizens United versus the FEC (Federal Election Commission). The ruling prohibited the government from restricting independent political expenditures by nonprofit or for profit corporations, labor unions and other associations. It was a tectonic shift that changed the economics of funding federal election campaigns.</p>
<p>Like Pavlovian dogs, politicians are trained to follow the money and Citizens United unleashed oceanic flows of money to PACs, Super PACs and 501c4s. With a candidate’s finite time for fund-raising, why spend it seeking contributions in $50, $100 or $1,000 increments at neighborhood meet and greets when the new rules allow donations to PACs, Super PACs and 501c4s in $1,000,000 increments. In the arms race for campaign dollars this was nuclear weapons versus bows and arrows. It is no surprise that six years after Citizens United large swaths of the main street electorate feel disenfranchised and alienated from America’s political elite.</p>
<p> </p>
<p>Sen. Jeff Sessions framed the current political landscape in clarion terms when he endorsed Donald Trump, “The events of history have aligned to give the people this fleeting chance to bust up the oligarchy – to take back control from the ‘Masters of the Universe’ return it to the good and decent and patriotic citizens of the United States.”</p>
<p>The Alabama senator’s term ‘oligarchy’ conjures up images of Russian power brokers from the pre or post USSR periods. But the term also applies in the U.S. where crony capitalists are close cousins to oligarchs. From Britannica – “Oligarchy: government by the few, especially despotic power exercised by a small and privileged group for corrupt or selfish purposes.” The natural protagonists to an oligarchy are peasants so an ‘oligarchs versus peasants’ paradigm is a good framework for understanding the unusual dynamics of campaign 2016.</p>
<p>In normal times one party would represent the peasants the other the oligarchs. Not so in 2016 when both parties have oligarch – peasant factions facing off to determine their party nominees. This was foretold in Ralph Nader’s 2014 book, “Unstoppable - The Emerging Left-Right Alliance to Dismantle the Corporate State.”</p>
<p>Oligarchs shun free markets and the market disciplines it entails. They prefer instead investments where they get the upside while the peasants are left to cover some or all of the downside. At the national level the best examples are the bailed out Wall Street banks and bankers and auto companies. But the oligarch list is long and storied from green energy firms like Solyndra to insurance companies that get protected when regulations they helped draft don’t pan out as planned. Heads the oligarchs win, tails the peasants lose.</p>
<p> </p>
<p>The oligarchy doesn’t end in D.C. It stretches down to state and local levels as well. In Mississippi, the $7 billion Kemper Power Plant is the grandest and most scandalous boondoggle in state history and the worst example of the oligarchy run amok. It is a project that would have never left the drawing board if it had to compete in the marketplace. But the appetite and ambition of the oligarchs remain undiminished.</p>
<p>They have now set their sights on the $17 million in annual revenue that the Jackson International Airport generates and the adjacent property that the current airport board oversees. Senate Bill 2162 seeks to create a new airport commission that would supersede the existing commission. The bill’s author claimed on the Senate floor that the airport was a desert amongst all the development around it in Rankin County. Au contraire, such analysis is exactly backward. The Jackson airport is an oasis that has been a huge economic boon to Rankin County since it was built over half a century ago. Before the airport was built Lakeland Drive was a dirt road and there was no bridge over the Pearl River where Lakeland Drive crosses now.</p>
<p>To paraphrase Sen. Sessions, the good and decent and patriotic citizens of Jackson paid for and built the Jackson airport and the oligarchs need to keep their greedy hands off it.</p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/opinion"><span>Opinion</span></a></div><div class="field-item odd"><a href="/columns"><span>Columns</span></a></div></div></div>Fri, 18 Mar 2016 17:52:14 +0000wmccain1916 at http://northsidesun.comThe Crony http://northsidesun.com/columns/crony
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202013_0.jpg?itok=1v5MQGK_" width="576" height="585" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>Once upon a midnight dreary, came a crony to our door,</p>
<p>Hand out reaching, reaching, reaching for our treasure store,</p>
<p>Tapping, tapping, a crony rapping on our treasure’s door,</p>
<p>And the word there spoken was the whispered word Kior.</p>
<p>Dreams of pine chips into diesel, strange new dreams like none before,</p>
<p>Such a rare and radiant promise that clever cronies call Kior,</p>
<p>Tax breaks, tax breaks, job creation,</p>
<p>Quoth the crony evermore.</p>
<p> </p>
<p>Deep into the dreamers peering long we stood there wondering fearing,</p>
<p>Is this just a beef plant haunted – tell us truly we implore,</p>
<p>But the crony so beguiling, turned our sad frowns into smiling,</p>
<p>And the only word there spoken was the whispered word Kior.</p>
<p>Thrilled us – filled us with fantastic tremors never felt before,</p>
<p>Tax breaks, tax breaks, job creation,</p>
<p>Quoth the crony evermore.</p>
<p> </p>
<p>But things turned poorly, poorly, sadly for the great Kior,</p>
<p>Production faltered, then was halted, revenues turned nevermore,</p>
<p>Kior shuttered, dreamers shattered, jobs were gone and nothing more,</p>
<p>From our own surcease of sorrow – sorrow for the lost Kior,</p>
<p>This we whispered, and an echo murmured back the word Kior,</p>
<p>Treasure drained and nothing more,</p>
<p>Tax breaks, tax breaks, job creation</p>
<p>Quoth the crony evermore.</p>
<p> </p>
<p>Back inside our treasure turning, all our soul within us burning,</p>
<p>Soon again we heard a tapping, somewhat louder than before,</p>
<p>Tapping, tapping could it be another crony wishing entry to our treasure store,</p>
<p>In there stepped a fat cat crony, spinning tales of jobs galore,</p>
<p>Kemper dreams of lignite magic, crony dreams are so fantastic,</p>
<p>Fat cat wheeler, fat cat dealer, who charms the crowds like few before,</p>
<p>Tax breaks, tax breaks, special funding,</p>
<p>Quoth the crony evermore.</p>
<p> </p>
<p>Kemper magic so beguiling, turns the skeptic frowns to smiling,</p>
<p>Crony tales of lignite bragging, shades of old time carpet bagging,</p>
<p> billions now and billions more,</p>
<p>Let our heart be still a moment and this mystery explore,</p>
<p>Monstrous Kemper, so gigantic, billions more turn Kemper tragic,</p>
<p>higher rates for evermore,</p>
<p>Kemper’s billions make us poorer, poorer - poorer than we were before,</p>
<p>Kemper’s magic will be tragic, not unlike the great Kior, higher rates for evermore,</p>
<p>Tax breaks, tax breaks, job creation</p>
<p>Quoth the crony evermore.</p>
<p> </p>
<p>Ashby Foote, (with apologies to Edgar Allan Poe) 30 March 2014</p>
<p><a href="mailto:ashby@vectormm.com">ashby@vectormm.com</a></p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/columns"><span>Columns</span></a></div></div></div>Tue, 13 Oct 2015 16:12:10 +0000nhodum1315 at http://northsidesun.comR.I.P. Kemper. Fracked, dead and buriedhttp://northsidesun.com/columns/rip-kemper-fracked-dead-and-buried
<div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img src="http://northsidesun.com/sites/northsidesun.com/files/styles/large/public/field/image/ashby%20foote--toned%202013.jpg?itok=XRlhofvs" width="576" height="585" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"> <p>It has been an expensive few weeks for Mississippi Power (MP). On May 20 SMEPA (South Mississippi Electric Power Association), a tentative partner in MP’s controversial Kemper Integrated Gasification Combined Cycle (IGCC) plant pulled the plug on their 15 percent ownership of the plant, necessitating the refund by MP of SMEPA’s $332 million down payment. June 11 brought more cash-draining news as the state Supreme Court refused MP’s request for a rehearing of the court’s earlier decision requiring MP to refund to ratepayers $281 million from an 18 percent Kemper related rate increase imposed in early 2013. To that $600 million in IOUs tack on millions more in future shortfalls of byproduct revenues from the sale of CO2. Due to plant delays, no CO2 has been produced and the contracts expired on May 11. Byproduct sales were projected to generate $50 to $100 million per year for the life of the plant. For financially strapped Mississippi Power, these developments represent an existential crisis.</p>
<p>The Kemper IGCC plant was an iffy and risky proposition from its very beginning, especially for a company of MP’s modest size. MP is the smallest service area in the Southern Company (SC) system with just 186,000 retail customers. In 2010, when construction began, MP earned $82 million on sales of $1.1 billion. That was just 3.7 percent of parent SC’s 2010 earnings. But MP’s small size didn’t curb SC’s ambitious plan for its Mississippi affiliate – a complex and capital intensive $2.4 billion IGCC project designed to turn low grade coal into electricity. Five years and $6 billion later, the start-up of the Kemper experiment is still a year away.</p>
<p>But more egregious than the IOUs and cost overruns is what MP and SC missed while they toiled away deep in the weeds of Kemper County. While the Kemper project was piling up billions in debt the most significant energy revolution in 30 years was disrupting shale formations across the U.S. – fracking. Wildcatters had been tinkering with hydraulic fracturing and horizontal drilling in shale for decades, but it wasn’t until 2010 and 2011 that the price of natural gas collapsed to $2, signaling to all who watched that a paradigm shift was under way. The shale fracking paradigm continues to roil global energy markets and the world of geopolitics. Meanwhile SC and MP, ensconced in their monopoly cocoons, trudged onward seemingly oblivious to the exploding abundance of natural gas that made Kemper’s future syngas obscenely overpriced. By the summer of 2014 the frackers had worked their shale drilling magic on oil and once again a bonanza of abundance collapsed prices – this time it was oil falling from $100 to $50 in just six months. In what seemed like the blink of an eye, the unimaginable had occurred – the U.S. had replaced Saudi Arabia as the world’s swing oil producer. Still now, MP and SC trudge on at Kemper – promising electricity from lignite if only the Public Service Commission (PSC), ratepayers and now the state Supreme Court would agree to pay 45 percent to 60 percent higher prices for their kilowatt hours.</p>
<p>By any reasonable business metric the Kemper IGCC project is a failure. That often happens with business experiments. Such is the nature of experiments. It is nothing to be ashamed of provided the business recognizes the experiment’s shortcomings, admits failure, learns from it and moves on. Such business actions are a vital and underappreciated element of a healthy and growing market economy. Some timeless quotes on failure from revered business icons offer good counsel: Thomas Edison, “I have not failed once. I have just found 2,000 ways that don’t work.” Henry Ford, “Failure is simply the opportunity to begin again, this time more intelligently.” Steve Wozniak, “Failure is what moves you forward. Listen to failure.” Gordon Moore, “Failures are not something to be avoided. You want to have them happen quickly as you can make progress rapidly.”</p>
<p>Running an electric utility in the 21st century should be a reasonable and stable business. We have been producing electricity for 130 years and what business wouldn’t like a monopoly status selling something people can’t live without? But imprudent business decisions and dismal execution by MP and its parent, SC have put MP’s future in great jeopardy. SC and MP’s current desire to have ratepayers take responsibility for $4 billion of the $6.2 spent on the Kemper plant is outlandish and unfair to ratepayers. If accomplished it would put southeast Mississippi at an economic disadvantage for decades to come. It is high time for Mississippi Power and Southern Company to pull the plug on Kemper and move on. </p>
<p>Ashby Foote is president of Vector Money Management and a member of the Jackson City Council.</p>
</div></div></div><div class="field field-name-field-section field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item even"><a href="/columns"><span>Columns</span></a></div></div></div>Tue, 07 Jul 2015 18:36:13 +0000nhodum1009 at http://northsidesun.com